The Top 5 Things to Consider When Getting an EIN Number
Making the Right Decisions for a Successful Business Launch3 min read
When you are starting a business, there are many important decisions that need to be made in order to ensure a successful launch. One of the most important of these decisions is how to handle taxes and that often means getting an Employer Identification Number (EIN). Whether your business is a small sole proprietorship or a large corporation, an EIN is essential to maintaining a healthy relationship with the IRS and to reap the potential benefits of filing taxes as a business.
If you’re based in Dallas, Texas, you’ll want to make sure you receive counsel from experts who understand the local regulations. Fortunately, at UpCounsel, you’ll have access to experienced attorneys who will make sure that you receive quality, cost-effective services. When you’re applying for an EIN, always make sure you keep the following five factors in mind:
1. Aim to Make the Process Quick and Painless
If you’re applying for an EIN online, one of the most important things to remember is that the process should ONLY take up to two weeks in total. However, keep in mind that if you’re applying through the mail with a completed Form SS-4, it’s going to take at least four weeks for the IRS to assign you an EIN.
2. Know What Taxes You Need to File
When you run a business, there are different types of taxes you may need to pay in order to remain in compliance with the IRS. Depending on the type of taxes you will be filing, the specific form you’ll need to complete will vary. For example, taxable corporations would need to fill out the Corporation Income Tax Return (Form 1120), while a non-profit organization would need to fill out the Form 990. Your UpCounsel attorney can help you determine what the appropriate form is.
3. Verify Your EIN
Whether you applied online or by mail, it’s best to verify your EIN as a good measure. Doing so ensures the accuracy of the information, helps prevent any discrepancies and can expedite tax filing. It also prevents identity theft, which is becoming an ever-growing issue.
4. Have Everything You Need Ready
Before beginning the EIN application process, make sure you have all the necessary documents ready, including proof of identification, personal information of officers and directors, business license registrations, the date your business started and other financial documents. It’s important that these documents, especially birth certificates, driver’s licenses and Social Security numbers, are up to date.
5. Understand Your Tax Identity
Your business’ tax identity will define how you will be taxed, as well as which taxes you need to pay. The Common Business Code system classifies businesses into various categories and your UpCounsel attorney can help you determine exactly which classification you should select. For example, some businesses may choose to incorporate as an LLC instead of an S-corp, due to tax advantages.
It can be a daunting and overwhelming process to apply for an EIN, but with the right knowledge and the assistance of an experienced attorney, you can make the process quick and painless. The UpCounsel network of experienced lawyers has you covered whether you need one-time counsel or an entire freelance legal department. In the end, with the assistance of UpCounsel, you can rest easy knowing that you made the right decisions throughout the process.